dmertz
Level 15

Retirement tax questions

Read the definition of AOB in the reference you provided or in CFR 1.408-11.  The $5,000 deposited later, but prior to the return of contribution, must be added to the $10,000 originally contributed.  By not accounting for that $5,000 in the AOB, the $5,000 is treated as investment gain (which it is not).